Innovations in Community Wealth Policy

May 29, 2014Denver, Colorado

Steve DubbResearch DirectorThe Democracy Collaborativesteve@democracycollaborative.org

Who We Are

Promote innovations in community economic development that enhance democratic life

FIELD BUILDING

Participate in anchor institution task force, metrics development, webinars, education & training, our Community-Wealth.org web information portal, etc.

RESEARCH

Write reports on anchors, public enterprise, community wealth building, green economy, etc.

ADVISORY

Develop community wealth building strategies linked to “eds and meds” & local philanthropy:

•Cleveland, OH•Atlanta, GA•Washington, DC•Pittsburgh, PA•Amarillo, TX

What is the Prevailing EconomicDevelopment Approach?

Some of its characteristics and elements include:• Tax beaks to entice corporations to relocate ($80B)

• Workforce training not linked to actual jobs ($37B)

• Regional trickle down strategies that do not reach low-

and moderate-income neighborhoods

• Low-wage job creation, often without benefits

• Little opportunity for ex-offenders, others facing barriers

• Gentrification and dispersal of traditional residents

• “Throwaway cities” and their infrastructure

• Privatization of publicly owned goods

What is Community Wealth Building?• emphasizes democratization of wealth

• focuses on place & local economy

• promotes broader ownership of capital

• anchors jobs locally

• stops the leakage of dollars from communities

• supports individual & family wealth building

• reinforces stewardship over capital

• generates revenues to finance public services

• leverages anchor institutions for local benefit

• contributes to local economic stability

• total cost accounting of economic decisions

Family Wealth Building

Shared EquityCommunity/Worker

OwnershipPublic Ownership or

Investment

–Individual Development Accounts

–Microenterprise

–Family Self-Sufficiency Program

–“Baby Bonds” & child savings accounts

–Earned Income Tax Credit volunteer assistance programs

–Alternatives to predatory lending

–Nonprofit financial education programs

–Community Land Trusts

–Limited Equity Housing Cooperatives

–Deed restriction (inclusionary zoning)

–Mixed ownership (Market Creek)

–Program-Related Investments

–CDC/CDFI equity investments or joint ventures

–Community benefits agreements

–Anchor institutions (eds, meds, churches, museums, libraries)

–ESOPs or worker cooperatives

–Consumer, producer, or purchasing co-ops

–Credit unions

–Community corporations

–CDC or CDFI direct ownership

–Social enterprises

–Commons-based enterprises (e.g., Wikipedia, Creative Commons licenses)

–Municipal enterprise

–State & local venture investments

–Public pension fund ETIs (economically targeted investments)

–Public leases: land & transit development

–Stock warrants in exchange for granting tax breaks (fair exchange)

–Trustee ownership (e.g., Alaska Permanent Fund)

Continuum of Wealth-Building StrategiesBROADENING OWNERSHIP OVER ASSETS AND CAPITAL

Rebuilding America’s Communities(Democracy Collaborative, 2010)

Community Wealth Building Policy

How we benefitted from employee ownership between 2002 and 2010

(Source: NCEO 2013)

Employee ownership center– cost per job vs. conventional methods

(Source OEOC 2012)

Building a New AllianceKey Components Putting the Pieces Together

Create worker. and community owned businesses that provide living wage jobs, anchor wealth, and build a local tax base that supports public pensions and other needed services

Use public procurement and contracts to provide a support economic ecosystem

Finance the effort by redirecting conventional economic development tools (TIF, etc.) to community-supported ends

City Government

CommunityGroups

ProgressivePolicy

Local Government

How Local Purchasing Can Help

• City contracts to local businesses foster local business development, thereby increasing tax collections from those businesses

• Purchasing locally creates more jobs, thereby reducing social service costs, while also increasing income of (and therefore tax payments collected from) local residents

Key Concept: “Least Total Cost”• The price paid is not the only cost of procurement• If local government pays a little less, but, in so

doing, reduces the taxes it collects and raises the cost of its social service expenditures, then it has achieved a false savings

• Rethinking city contracting with “total cost accounting” in mind is not just smart accounting, but a vital step in building a vibrant local economy

Policy Examples: Washington DC region• Washington, DC: 50 percent of expendable budget

(not including construction, personnel) is prioritized for local “certified business enterprises”

• Montgomery County, Maryland: On smaller contracts (roughly $250 million in total spending), the County is able to target contracts to support local small business. At present, 36 percent of total contracts go to local small business, well above the 20 percent required by law.

Policy Example: Cleveland, Ohio• City of Cleveland has a policy that favors contracts

for LPE (Local Producers) and SUBE (Sustainable Businesses), giving up to a 2% bid discount for each designation (maximum total discount of 4%)

• 146 subcontractors and 41 prime contractors that qualified under this ordinance obtained City contracts in 2012

• 2012 business volume: $85 million

Making It Happen“Over 80% of businesses in our County are small business ... We’ve unbundled large contracts. We had large custodial services contracts – all my public buildings (250 buildings) were serviced by two companies. Now we have contracts for five regions with local opportunities. It is more contractual management on our part, but it is a bigger benefit for the local business community.”

Metro DC local government procurement director

Evergreen Cooperatives

Individual Co-op BoardsIndividual Co-op Boards

Governance Structure

Evergreen Cooperativesfrom the City perspective (1)

“HAVE WE EVER THOUGHT ABOUT TELLING RESIDENTS OF POOR COMMUNITIES, WHY DON'T WE MAKE YOU THE EMPLOYER”

- Ron Sims

Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012

Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012

Evergreen: City perspective (2)

Evergreen: City perspective (3)

Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012

• Project Site:10 Acres, Approx. 60 Parcels• City owned approx. 40 parcels (7 acres)• Remaining Parcels:

• 4 Occupied Houses• 2 Business Owners• Many Vacant Parcels

• Worked w/ HUD & local CDC to create a Relocation Plan• 3 Owners – purchased new home• R. Atkins – senior living, purchased new personal items• Business owners – 1031 Swap

• Vacant Parcels• Used Land Bank for acquisition

Green City GrowersLand Assembly

Source: David Ebersole, City of Cleveland, Dept. of Economic Development, 2012

Community wealth across the nation

Community Wealth

Building Initiative

First business: stormwater management maintenance and

monitoring (late 2014)

First business: large-scale greenhouse to grow and

process lettuce (early 2015)

Community wealth in Indian Country

Multi-year collaboration with Native American communities in four communities (2 urban, 2 rural) to build and retain wealth by developing effective strategies that foster ownership of enterprise, increase access to local assets, and create and anchor jobs locally

• $1 million for Affordable Housing Trust Fund

• $436,000 for City Center for Workforce Innovation

• $255,000 for wrap-around services (child care, etc.)

• $200,000 for public housing service navigators

• $357,000 for education improvements

• $350,000 for bus rapid transit line planning

• $300,000 for new Office of Community Wealth Building

• $450,000 for job creation for low-income residents,

including $150,000 in social enterprise development

Mayor Jones’ Anti-Poverty Agenda($3.3M+ initiative, announced April 15, 2014)

Policies to Support Co-ops and Employee Ownership

• Legal recognition of worker and multi-stakeholder cooperatives• Linked deposits to finance conversions• Business succession program to encourage “baby boom” firm owners to sell to their employees• Funding for an employee ownership center• Right of first refusal• Tax credits for co-op investments• Expanding small business offices to serve co-ops• Investment in “Evergreen” type initiatives

Additional Community Wealth Building Policies

• Community benefit legislation• Urban agriculture overlay zoning• Support for asset building coalitions• Partnering with local CDFIs on loan funds• Land banking• Public ownership of local utilities (as in Boulder)• Responsible banking• Pension fund investment in local projects• Public bank• Office of Community Wealth Building

For more information:www.community-wealth.org

Steve DubbResearch Director

Democracy Collaborativesteve@democracycollaborative.org

Thank you!